Airbus Worries Max Crisis Could Affect FAA-EASA Alignment

 - April 30, 2019, 1:55 PM

While cautioning that it remains too early to draw conclusions and characterizing Airbus as an observer more than anything else, Airbus's new CEO expressed concern about the possible effect of the Boeing Max grounding and the ongoing investigation into the relationship between Boeing and the FAA during the certification of the model.

Speaking Tuesday during a first-quarter Airbus earnings presentation with analysts, Guillaume Faury conceded that the Max events have created “a lot of tensions, questions, and we see growing concerns on many topics.”

“[We see] more scrutiny coming from all over the place. That is a fact of life we have to face,” he said. Any “de-alignment” of the FAA and the European Union Aviation Safety Agency (EASA) represents a particular concern, he added. “The alignment of the FAA and EASA is a strong basis of our industry,” noted Faury. “And we hope that these events will not create a mid-term or long-term dealignment between two main [certification] authorities in this industry.” 

Asked whether customers have spoken with Airbus about potentially switching over from the Max to the A320, Faury quipped “the A320 is the A320 and the Max is the Max.” The Toulouse-based company, he noted, is talking with its customers based on their current fleets, their backlogs, and the delivery of the A320s. “We are limited by [our] production [capacity] for the next years and therefore there is not much more I can say,” he explained. “There is strong demand for the A320; that was the case before the [Max] events and it continues to be the case, linked to the growth of the market in general, linked to the appetite for the A320 product itself, which is very well perceived with the neo, the ACF, the LR, and more.  We see a good case for continuous growth and performance of the A320 family.”

The demand environment for narrowbody jets remains “pretty active,” he said, though Faury described the overall market situation in the first quarter as “volatile and competitive” as several airlines face financial trouble and changing fleet plans. “We had to record cancellations,” he conceded. “We are not the only ones in the industry.” In the first three months of the year, Airbus inked orders for 62 aircraft but it registered 120 cancellations, leaving it with negative net order tally of 58 aircraft for the period.

Airbus will not accelerate A320 production rates beyond the 60 aircraft per month by the middle of this year and 63 in 2021 as previously planned because it continues to recover from the supply chain and production problems it faced last year. “2019 still is a backloaded year,” said Faury. “We want to use 2019, 2020, and 2021 to significantly rebalance the year” and better distribute deliveries and cash flow execution over the quarters. Airbus hasn’t decided rates for beyond 2021, as much will depend on in-house ability and appetite to accelerate production and the capacity of the supply chain. In fact, the OEM plans to run a supply chain assessment later this year, he added. “Now, we want to focus on on-time and quality delivery to our customers,” said Faury.

Regarding the threat of Boeing’s proposed NMA, Faury emphasized Airbus does have the right product to address the middle of the market. “We are moving forward with what we think is appropriate for the A320/A321 product, trying to anticipate and answer the customers’ expectations and the market needs,” he said. “We have as well the A330neo, with the -8 in its certification phase and -9 on the market.  We think that on the Airbus side we have the right product to address the middle of the market. I do not see changes on that.” Airbus plans to release details of further versions of the A321LR later this year, possibly at June’s Paris Air Show.

“We think the space for Boeing to launch an NMA is rather small,” said Faury. “And it’s on them to decide if and when the product [is unveiled] and what it will look like. We are moving on with two strong products.”